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How did the power tariff decide in India

The power tariff places a crucial role in the development of the country s economy and a country like India the power tariff seems to be one of the most important inputs towards economic growth. However the current power consumption India doesnt have a satisfying number and most of the states are facing the regular power cuts. Over the past few years many power regulation acts have been reformed and policy has been made but the key challenges are yet to be addressed.

The tariff schedule issued by the ministry of Delhi Electricity Regulatory Commission in March has been an innovative step towards one of the major tariff releases in India. A utility of power purchase cost has been constituting 50-60% of the total tariff chargeable cost to consumers. Most of this power purchase cost in contact through long term contracts based on different charges with the fix utility and obligations and it will be serviced to purchase the power by the tariff department.

In addition to the above the utilities also have their own fixed costs relating to retail supply and wheeling costs. Currently distribution tariffs are largely skewed towards the recovery of a utility s Aggregate Revenue Requirement (comprising of both fixed and variable charges)through the levy of per unit consumption-based energy charges with a small component being recovered through a fixed or demand charge (based on Rs per Kilowatt per month) irrespective of consumption. In addition the above utilities also have their own fixed cost related to retaining supply and wheeling costs. The distribution of all power tariffs is largely skewed towards the recovery of utility

1) Domestic power tariff rates in Indian states

Many of the states like Maharashtra Kerala West Bengal & Andhra Pradesh have been used the highest domestic power tariff in our country. In which Maharashtra has the highest power tariff of Rs 8.80 per unit & 8rs in Bengal. With Rs 6-7 cost per unit in Andhra and Madhya Pradesh.

2) Structure of Power tariffs

To measure the fixed cost that is largely recovered through a fixed component of a tariff it has been important that the energy cost is fixed and not been fluctuated. Also the increase in fixed charges shall act as a deterrent to theft of electricity as the incentive to manipulate consumption will progressively lower down with reducing variable energy charges.

3) Research Methodology

To understand the power tariff of India they have taken some steps with analyzing power from 26 states to get a clear picture. They have included different categories in analysis such as domestic non-domestic & commercial resources. The discussion has been stepped and the charges have been evaluated and the proper result has been obtained.

However the present scenario of the Indian power tariff is not so stable but steps have been taken to make it more powerful and which can help in the country s economic growth